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How Corporate Social Responsibility Affects Accounting Performance: A Cross-Country Analysis

Author

Listed:
  • Agus Munandar
  • Akhmad Syakhroza
  • Dwi Martani
  • Dodik Siswantoro

Abstract

Purpose: The aim of this study is to examine the impact of corporate social responsibility (CSR) on the accounting performance (AP). This study extend the previous literature in terms of country coverage which employing Zakat as a proxy for CSR. Design/Methodology/Approach: Our sample for this study is 709 firms from companies in Kuwait, Saudi Arabia, and Malaysia. We predict that highly corporate social responsibility exhibits high level of return on equity (ROE), and return on assets (ROA). Findings: We find that firms with strong incentives for corporate social responsibility are more likely to increase their ROE and ROA. This suggest that corporate social responsibility is important platform in increasing its corporate performance. Practical implications: Based on this study, effectiveness of implementation of CSR program benefits the society, in turn, leads the company to enhance the level of CFP. Originality/Value: This paper uses some companies in some countries in a cross country analysis. Research results in one country often overlooks institutional and cultural factors such as corporate governance, local government regulations, and the relationship between shareholders and management.

Suggested Citation

  • Agus Munandar & Akhmad Syakhroza & Dwi Martani & Dodik Siswantoro, 2020. "How Corporate Social Responsibility Affects Accounting Performance: A Cross-Country Analysis," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 10(3), pages 81-89.
    • Handle: RePEc:ers:ijfirm:v:10:y:2020:i:3:p:81-89
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    References listed on IDEAS

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    1. Kao, Erin H. & Yeh, Chih-Chuan & Wang, Li-Hsun & Fung, Hung-Gay, 2018. "The relationship between CSR and performance: Evidence in China," Pacific-Basin Finance Journal, Elsevier, vol. 51(C), pages 155-170.
    2. Angeloantonio Russo & Francesco Perrini, 2010. "Investigating Stakeholder Theory and Social Capital: CSR in Large Firms and SMEs," Journal of Business Ethics, Springer, vol. 91(2), pages 207-221, January.
    3. Brown, William O. & Helland, Eric & Smith, Janet Kiholm, 2006. "Corporate philanthropic practices," Journal of Corporate Finance, Elsevier, vol. 12(5), pages 855-877, December.
    4. Yun-Chia Yan & Li-Chuan Chou & Ta-Cheng Chang & John Darcy, 2017. "The Impact of Social Responsibility on Corporate Performance: Evidence from Taiwan," Accounting and Finance Research, Sciedu Press, vol. 6(2), pages 181-181, May.
    5. Stephen Brammer & Andrew Millington, 2008. "Does it pay to be different? An analysis of the relationship between corporate social and financial performance," Strategic Management Journal, Wiley Blackwell, vol. 29(12), pages 1325-1343, December.
    6. Baruch Lev & Christine Petrovits & Suresh Radhakrishnan, 2010. "Is doing good good for you? how corporate charitable contributions enhance revenue growth," Strategic Management Journal, Wiley Blackwell, vol. 31(2), pages 182-200, February.
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    More about this item

    Keywords

    Cross country; Corporate Social Responsibility; corporate financial performance.;
    All these keywords.

    JEL classification:

    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative

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